Court Agrees with IFS, Rejects $18 Million Campaign Finance Fine

Alexandria, VA – The Court of Appeals for the State of Washington Division II yesterday overturned part of a lower court decision that imposed an $18 million fine for a campaign finance violation. The court agreed with an Institute for Free Speech amicus brief in the case that argued the violation was not intentional as a matter of law, and the fine should not have been tripled.

The case, State of Washington v. Grocery Manufacturers Association, started in 2013 when the Grocery Manufacturers Association (GMA), a national trade group, opposed a ballot measure that would have mandated GMO labeling.

After a complaint filed by supporters of the ballot measure, the state sued GMA for failing to register as a political committee and failing to disclose the sources of its contributions. The state trial court not only found GMA violated those laws, but that it did so intentionally, tripling the associated fine. The court fined GMA an unprecedented $18 million.

The appeals court rejected the triple fine: “[A] party must have knowledge that it was violating the law to be subject to treble damages. The fact that GMA deliberately engaged in conduct that the trial court later determined was a violation of the [law] does not mean that GMA intended to violate the [law].”

This ruling echoes the Institute for Free Speech’s amicus brief in the case: “The standard for treble damages used by the Superior Court fails [the] requirement that fines be tailored to the government’s purpose for imposing punitive damages. A court may only impose punitive damages-such as the treble damages here-to express ‘moral condemnation’ and ‘to punish reprehensible conduct.’”

“We’re glad the court recognized that excessive fines should not be a tool regulators use to police good-faith legal errors,” said Institute For Free Speech Legal Director Allen Dickerson. “Fines this large inevitably chill campaign activity, since a tripled fine will cripple most organizations discussing ballot measures. Groups concerned they may flub a technical reporting requirement will often choose not to take the risk of speaking.”

The appeals court decision is available here. IFS’s amicus brief is available here.

About the Institute for Free Speech

The Institute for Free Speech is a nonpartisan, nonprofit 501(c)(3) organization that promotes and defends the First Amendment rights to freely speak, assemble, publish, and petition the government. Originally known as the Center for Competitive Politics, it was founded in 2005 by Bradley A. Smith, a former Chairman of the Federal Election Commission. The Institute is the nation’s largest organization dedicated solely to protecting First Amendment political rights.